SBI Drops Savings Account Interest Rate To 3.5%

State Bank of India (SBI) announced Monday a sharp cut in the interest rate of savings account with immediate effect. From today savings account with deposit up to Rs 1 Crore to get 3.5 percent interest rate, which is lowest in past six years and it to impact 90 per cent of its customers.

SBI is the largest lender in India and until now its interest rate on savings and current accounts was 4 percent. It has savings bank account base of about Rs 9 lakh crore.

Between 2003 and May 2011 too the savings account interest rate was 3.5 per cent, but there was no cap of Rs 1 crore deposit.

Announcing the latest drop in interest rate the bank said the decision is based on large inflows in savings and current accounts during the last two months of last year when the country was in the phase of demonetisation.

SBI added, “The decline in the rate of inflation, high real interest rates and the expected softening of interest rates are the other considerations warranting a revision in the rate of interest on savings bank.”

SBI Managing Director Rajnish Kumar addressed the press people saying 4 percent rate remained static since 2011 even after the drop in overall interest rate and also the retail inflation.

SBI is also trying to encourage people to move to fixed deposit rates (FDR) as it is less volatile.

However, it is understood other banks too may drop interest rate on savings account.

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